Politics and Corruption in the Gilded Age

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What was the relationship between goverment and business in the late 1800s?

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Government and business were closely tied together during the late 1800's. The Republican administrations of the Gilded Age passed high tariffs that protected American business interests by raising duties on imported goods. Many Populists and Progressives viewed tariffs as an unfair tax on the consumer. Big American business saw it as giving them an advantage and allowing them to employ more unskilled laborers. Government also did not get involved in labor strikes unless it was a matter of moving the mail. Government agents intervened in railroad strikes on the side of business when it looked like the strikers would obstruct mail services.

Government also listened to business interests in terms of foreign policy. The Queen of Hawaii was overthrown by sugar and pineapple planters. She lost her power officially when McKinley annexed the islands at the request of business interests there. Government also annexed islands in the Pacific in order to allow American merchants to reach China. One major reason for the Spanish-American War was to placate American business interests in Cuba who were under constant harassment by Cuban rebels targeting foreign-owned interests.

Perhaps the greatest marriage between business and government was the retention of the gold standard with the election of McKinley in 1896. There were many pressures from Democrats and Populists to adopt bimetallism; however, business did not want to see increased inflation rates and they put pressure on their workers to vote in favor of the gold standard and vote for McKinley. By keeping the US on the gold standard, American business benefited at the expense of farmers who would have been better off with easier credit.

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The Second Industrial Age is famous for the degree to which businesses grew increasingly large in scale. This is powerfully expressed in examples such as Andrew Carnegie and John D. Rockefeller, and their dominance in the steel and oil industries. Across the US economy, entire markets became dominated by trusts and monopolistic enterprises. This, in turn, provided business leaders with a lot of wealth and political influence.

During the Second Industrial Age, government acted in support of business. You can see this in the example of the railroad industry, which collaborated with government in order to expand. Consider how the government actively subsidized the railroad industry through use of land grants. At the same time, we see in the railroad industry's fight against the Granger Movement which wanted to regulate railroads. Monopolies and powerful companies spent large sums of money to achieve political ends. These kinds of examples illustrate the degree to which business and government were tied together.

Another critical example can be found in government's problematic relationship with the unions. Consider the ways in which the Sherman Antitrust Act was actually used against unions. In disputes between management and workers you can expect government to side with business. To conclude, government was actively invested in supporting business interests.

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In general, the government favored business interests during this era, which is known as the Gilded Age. This was also a period of widespread corruption in government.

Business and commerce flourished during the Gilded Age. But the national government failed to regulate the fast-growing economy. The Interstate Commerce Commission (ICC) was created in 1887, but it was feeble. The Supreme Court generally ruled in favor of business during these years. The powerful railroads, in particular, greatly benefited from the government's failure to regulate interstate commerce. It was only after Theodore Roosevelt became president, early in the twentieth century, that the ICC was finally given real enforcement powers.

The failure of the national government to regulate the economy also contributed to two extremely severe economic recessions. In 1873, the country entered a bad four-year recession. A downturn starting in 1893 was even more dire. Thousands of businesses failed, and millions of workers lost their jobs.

Ordinary workers and farmers bore the brunt of the government's capitulation to business interests. Workers formed labor unions, which were often violently suppressed. Farmers organized, too. By 1890, the rising discontent led to the creation of a third party, the Populists. The Populists wanted the government to assist workers and farmers. But the Populists were finished by 1896, after losing an election.

Finally, after 1900, the government began to regulate business and protect some vulnerable groups that had suffered during the Gilded Age.

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In the 1800s the relationship between the government and businesses was a mutually beneficial one. Business owners preferred minimal federal intervention, while the government established law and order so that company operations would not be interfered with. It was a win-win situation in that businesses made profits and the government received taxes to enable it to function smoothly. However, that relationship was faced with some resistance from progressives who believed that the government should do more to protect the needs and rights of consumers and workers. The calls for reform eventually led to one of the first acts to regulate business conduct, the Interstate Commerce Act of 1887, which prevented monopolistic conduct in the railroad industry. Three years later the Sherman Antitrust Act, which promotes fair business competition, was adopted. However, the relationship between the government and businesses remained fairly good after the passing of these laws because they were not strictly followed.

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The relationship between businesses and the government in the late 1880s was a very good one. The prevailing philosophy during this time period was one of laissez-faire. This philosophy was one that supported very little government involvement in and regulation of the economy. As a result, businesses were free to do almost anything they wanted to do.

There were very few laws passed to protect workers. The government generally supported the business owners when there were strikes against them. As a result, many strikes were unsuccessful. Businesses were also able to grow in size. They began to establish monopolies. This reduced competition and allowed businesses to make more money by charging higher prices. Some states passed laws that allowed businesses to form corporations. Even when laws were passed to control business activities, the laws were worded so unclearly that the courts wouldn’t act on them. The Sherman Antitrust Act was an example of such a law. The courts also sided with the business owners when there were disputes with the workers.

The relationship between the government and businesses was a very good, close relationship in the late 1800s.

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